Is Berkshire Hathaway a private equity firm?
While Berkshire Hathaway shares a few attributes with private equity firms, mainly the business of buying companies, it's a decidedly different creature. Its strategy is rooted in values quite distinct from the high-octane, leveraged buy-out world of PE.
In fact, much like KKR and other private equity companies, Berkshire Hathaway is indeed a source of investment capital from wealthy individuals and institutions for investing in and acquiring equity ownership in companies.
Berkshire Hathaway is a holding company run by Warren Buffett that owns a diverse range of private businesses and significant minority interests in public companies such as Apple.
One of the most famous investors in private equity is Warren Buffett. Buffetts Berkshire Hathaway holding company has been an investor in a number of private equity firms over the years, including Kleiner Perkins, KKR, and Goldman Sachss private equity arm.
The four largest publicly traded private equity firms are Apollo Global Management (APO), The Blackstone Group (BX), The Carlyle Group (CG), and KKR & Co. (KKR).
they are different companies with different strategies. BOTH are exceptionally successful. Bigger does NOT mean “better” Past performance has nothing to do with future performance. Berkshire Hathaway has about SEVEN times the market cap of Black Rock.
Unlike hedge funds, which post periodic returns and make payouts to investors, Berkshire Hathaway earns its profits from the dividends of the firms that it has invested in.
Technically speaking Berkshire Hathaway is not a hedge fund, it is a holding company. Although Berkshire operates similarly to a hedge fund in terms of investing in stocks and other securities, it does not take performance fees based on the positive returns generated every year.
Berkshire Hathaway Class A is the company's original stock offering, known for its stratospheric price per share. Berkshire Hathaway Class B shares, first issued in 1996, are more modestly priced and have a correspondingly modest share of equity value in the company.
|Berkshire Hathaway Top 5 Equity Holdings
|Bank of America Corp. (BAC)
|Coca-Cola Co. (KO)
|American Express Co. (AXP)
|Verizon Communications Inc. (VZ)
What is the difference between private equity and private investors?
The most significant difference is that private equity investors receive a share of ownership of the companies they invest in, while private credit investors do not.
Berkshire Hathaway Inc. (BRK. B), led by billionaire investor and CEO Warren Buffett, is a diversified holding company whose subsidiaries are involved in insurance, freight rail transportation, energy generation and distribution, manufacturing, and retailing.
The Big Four—KKR, Blackstone, The Carlyle Group, and Apollo Global Management—stand at the pinnacle of the private equity industry. Collectively, they manage hundreds of billions of dollars across various investment strategies, including private equity, real estate and credit.
Private equity is a core pillar of BlackRock's alternatives platform. BlackRock's Private Equity teams manage USD$41.9 billion in capital commitments across direct, primary, secondary and co-investments.
|Pflug Koory, LLC
|Vanguard Group Inc
|Harris (Everett) & Company
|PNC Financial Services Group, Inc.
Berkshire Hathaway takes a similar approach. However, instead of buying a few shares of a company's stock, it buys the whole company. By applying that investment strategy for decades, Berkshire Hathaway became the massive global conglomerate that we know today.
|Total value ($)
|The Vanguard Group, Inc.
|BlackRock Fund Advisors
|SSgA Funds Management, Inc.
|Geode Capital Management LLC
Berkshire Hathaway has experienced controversy due to its former charitable giving practices. Buffett believed that it was inappropriate for a company to direct its charitable giving to the pet causes of the board of directors.
Warren Buffett named Greg Abel, 61, as his successor at Berkshire Hathaway back in 2021. Abel started out as an accountant, before taking the reins as CEO of Berkshire Hathaway Energy. The Canadian businessman might find himself in the spotlight more with Charlie Munger's passing.
Should I invest in Berkshire Hathaway A or B?
B has performed slightly better since 1997 with a 10.82% compound annual growth rate, compared to 10.79% for BRK. A. However, there is no reason why this outperformance should continue. It should not make a difference for returns whether you buy class A or class B stock.
Berkshire Hathaway is a large cap holding company that owns dozens of businesses, cash and equity investments. Reminder: it's not a mutual fund or an ETF fund. It's a corporation with Warren Buffett as Chairman and CEO.
If you're looking for increased portfolio protection, Berkshire Hathaway is among the best recession-resistant stocks to consider.
With 37.3% of his wealth tied to the same basket as retail investors, Buffett's stake is unmatched by any other insider or institutional investor. According to the most recent filings, the next largest insider stake is that of Charlie Munger, Berkshire Hathaway's vice chairman, who owns just around 0.1% of the company.
Buffett worked with Christopher Webber on an animated series called "Secret Millionaires Club" with chief Andy Heyward of DiC Entertainment. The series features Buffett and Munger and teaches children healthy financial habits. Buffett was raised as a Presbyterian, but has since described himself as agnostic.